WASHINGTON (AP) -- With voters set to choose a new president and Congress in six days, the Federal Reserve will likely keep a low profile when it ends a meeting Wednesday to try to ensure it doesn't become part of the debate at the close of a tumultuous political campaign.
The Fed is expected to end the meeting with a policy statement that leaves interest rates unchanged. It's possible that the statement will include a signal that a rate hike is likely at the Fed's next meeting in mid-December as many expect. On the other hand, the Fed might decide to offer no hints Wednesday of a forthcoming rate hike in order to remain entirely neutral at a sensitive political moment.
"In the midst of an election, the last thing the Fed wants to do is add fuel to all the political controversy from the candidates," said Sung Won Sohn, an economics professor at California State University, Channel Islands.
Sohn and other economists say they still think December is when the Fed will resume the rate increases it began late last year after having left its benchmark rate at a record low near zero for seven years. Next month's meeting will include a news conference by Chair Janet Yellen, which would provide a platform for her to explain the Fed's action and perhaps provide guidance on how many further rate increases the Fed foresees in 2017.
The Fed's years of record-low short-term rates were credited by many analysts with rejuvenating the economy after the Great Recession. When the Fed finally raised rates modestly in December last year, most economists and the central bank itself foresaw multiple rate increases in 2016. But economic weakness and market turmoil in China and Europe and a slowdown in U.S. growth kept the Fed on the sidelines.
The economy has been showing some improvement lately. As measured by the gross domestic product, the economy grew at a 2.9 percent annual rate in the July-September quarter, the government estimated last week, more than twice the rate in the April-June quarter.
The unemployment rate is 5 percent, typical of a healthy economy, down from 10 percent in 2009, and the housing market, whose meltdown triggered the 2008 financial crisis and the recession, has largely recovered.
Yet the Fed has sent no signal that a rate hike might occur this week. That is telling, analysts say, because the Fed under Yellen has carefully avoided catching investors off guard.
A gauge of investor sentiment estimates the possibility of a Fed rate increase this week at just 7 percent. The likelihood of a December increase is put at 74 percent.
In a recent speech, Yellen said she might be open to "temporarily running a 'high-pressure economy'" to help heal some still-lingering damage from the recession and to try to boost spending and investment by consumers and businesses. By "high pressure," Yellen meant an unemployment rate below a level associated with a healthy economy and an inflation rate above the Fed's 2 percent target.
Her comments were taken to mean the Fed was in no hurry to raise rates and were viewed as a further signal that Yellen was willing to delay the next hike until December - even though the Fed's decision to leave rates unchanged in September drew an unusually high three dissenting votes.
Yellen's comments have also been cited by analysts as an argument that her go-slow approach may mean only one rate increase this year and then one, or at most two, increases in 2017. With inflation still running below the central bank's 2 percent target, many Fed officials have said they think they have room to continue pursuing an extremely gradual approach to rate increases.
"Yellen wants to run a high-pressure economy by overshooting inflation and pushing the unemployment rate lower," said Diane Swonk, chief economist at DS Economics. "She wants to hedge against another recession."